IR system kills the car industry

The list of workplace benefits and inflexibilities that
Toyota Australia
wants to reduce is a testament to how its unions have disregarded the need for the business that sustains them to be cost-competitive on world markets. A three-week Christmas shutdown, paid time off to donate blood, no medical certificates for sickies, a five-hour work day before Christmas, restrictions on temporary contractors, 17.5 per cent pay loadings for holidays, extra pay for dirty work, double time-and-a-half for Sunday overtime, shift premiums for workers on long service leave: all these and more have traditionally been paid for by fleecing Australian car buyers and taxpayers. But this cornucopia of workplace perks is coming undone as the high Australian dollar has increased the cost disadvantage of local car-making amid a global glut of capacity. As
Ford
and
General Motors
have announced their exits, the question for the workers and unions at Toyota is whether they really want to save their own jobs.

That such a list of benefits has survived this long in an industry under such competitive pressure and attracting such heavy taxpayer subsidy is extraordinary. It chimes with Toyota Australia boss
Max Yasuda
’s famous complaint to The Australian Financial Review last year that Australia’s workplace culture was fundamentally undermining his factories’ efficiencies. He declared himself distressed at the high number of sickies, and insisted on selecting workers to be made redundant by their work record. This of course is from a corporate culture famous for productive and collaborative workplaces, at least in Japan. In Australia, it is not difficult to imagine the counterpart of a culture protected from competitive pressure, rather than forged on the need for exports, and traditionally based on the idea of a fundamental conflict between labour and capital. It’s not difficult to accept reports today in the Financial Review of a culture where groups of workers regularly take off Friday afternoons to give blood. But it’s difficult to understand how an industry reliant on export orders to compensate for a small domestic market can allow its capital-intensive factories to remain idle for weeks on end.

Now Toyota is fighting in the courts for the right to seek to amend an enterprise bargain that stipulated there could be no changes to the agreed terms and conditions. This literally puts the onus on the workers to decide the fate of their own company and their jobs. This industrial relations mess is a result of missed political opportunities over decades, which have left the reform of Australia’s heavily regulated labour market lagging behind financial and product markets. In the late 1970s, the Fraser government’s then industrial relations minister,
Ian Viner
, pushed for a less centralised collective system based more on collective bargaining. The problem was that, without deregulating the financial market and reducing import protection, this would merely allow the unions to flex their industrial muscle. This is what happened.
Malcolm Fraser
caved in to the Transport Workers’ Union so he could fly out to the Charles and Diana wedding. And the strikes and wage demands of the metal workers destroyed the jobs of 100,000 dead men, as Paul Keating later charged. Today, financial deregulation, lower import protection and less centralised bargaining means Australia’s China boom did not unleash such a wages blowout. But the strong dollar has amplified Australia’s high cost structure, while the labour market re-regulation of the Rudd and Gillard governments has reinforced the inflexibilities of the industrial award system.

All this means that Toyota, along with Holden and Ford, risks becoming a tombstone to the anachronism of Australia’s workplace culture and institutions. With the Abbott government reluctant to bring labour market reform up to speed with the financial and product market liberalisations of the past three decades, there is a real chance that the unions and their members would rather destroy their jobs than give up their “hard-won gains" of battles past.